Who says you can't teach an old auction house new media? On October 10, Phillips hosted the first high-profile auction dedicated exclusively to digital artworks of all forms, in collaboration with Tumblr and curated by Lindsay Howard, with 80% of proceeds going to the artists and the rest donated to the veteran online art community Rhizome.

Paddles On! was more than just a live auction—it was a week-long exhibition in Midtown Manhattan, a livestream gallery talk, a panel discussion, tequila, Perrier, Fun Buns and an after-party DJ'ed by chiptuners Anamanaguchi. It was a celebration of digital art in all its glory, a symbolic and promotional fundraiser for "artists who are using digital technologies to establish the next generation of contemporary art". It was an event imagined and organized by three young women: Phillips' director of digital strategy Megan Newcome, Tumblr's arts evangelist Annie Werner, and Lindsay Howard, the 27-year-old curatorial director of 319 Scholes in Brooklyn. It was 20 lots, from a lenticular print to an animated GIF, by 18 artists, from Mark Tribe to Molly Soda, most of whom represented the millennial generation who grew up on the Web, with a respectful nod to the elders who paved the way (Rhizome), pioneered the market (Casey Reas) and opened up doors (Phillips). It was also a groundbreaking auction whose final sales totalled a non-negligible $90,600.

Of course, institutional recognition of digital art wasn't born yesterday. One may recall the fuss made in New York when the Guggenheim Museum commissioned Shu Lea Chang's Brandon website, or in France, where the Fonds régional d’art contemporain du Languedoc-Roussillon purchased Nicolas Frespech's website Je suis ton ami(e), tu peux me dire tes secrets for 25,000 francs, both in 1997. More recently in 2011, the Whitney Museum hosted a solo retrospective exhibition of Cory Arcangel, who is famous for using digital tools and modifying digital media. This year, the Museum of Modern Art inaugurated its permanent, ongoing collection of video games in March, and in August, Smithsonian's Cooper-Hewitt, National Design Museum acquired its first piece of (interaction design) source code for Planetary in order to preserve it "as a living object".

And let's not forget We AR in MoMA, the augmented-reality hijacking of the Museum of Modern Art's real gallery space by virtual artworks on October 9, 2010. But Mark Skwarek and Sander Veenhof's provocatively staged "art invasion" was more than just a tongue-in-cheek attempt at augmented graffiti, it manifested many emerging media artists' frustration at their relative invisibility within the mainstream art world. Because once institutional recognition is established, the reasoning goes, the market will follow, right?

If museums are about culture, auctions are explicitly about money. And yes, digital art has been sold and auctioned off before. After all, panel speaker and Bitforms Gallery founder Steve Sacks has been dealing new media art for the past 12 years. Out of the 18 artists presented in Paddles On!, one-third already enjoy formal gallery representation, while a few are fresh from Tumblr fame. Among the six artists already on the market, two have elaborated their own terms of contract and/or pricing for their online works, which already have a following.

Petra Cortright calculates the current price for each of her video works by multiplying a predetermined rate by the number of individual plays on YouTube, something like Google Ads. Given that her videos are viewed on average about 10,000 times, she's not exactly going for the "scarcity" model. Cortright's 24-second webcam video RGB,D-LAY sold for $3,200. (In contrast, Tumblr "It-Girl" Molly Soda's 8-hour, 16-minute, 49-second, single-shot webcam video Inbox Full sold for $1,500.)

Rafaël Rozendaal takes a different approach, by commodifying the unique domain name of each of his stand-alone online artworks, while the buyer commits to keeping the website accessible, intact and alive. The only post-purchase modification is to preface the title of the artwork in the browser window with "Collection of [name of buyer]". It's like having your name engraved on the back of a theater seat, except that you're also responsible for keeping the seat clean, free and functional for the duration of your lease. Rozendaal's ifnoyes.com website sold for $3,500.

Buyers could rest assured that the deluxe HD versions of most of these online freebies would be presented in fancy packaging on USB stick or Mac mini, so there was still a physical container for the digital content they would own. But perhaps more telling was the fact that both Cortright and Rozendaal's respective other works, digitally tooled yet physically incarnated, sold for almost three times as much. Maybe the high-resolution elephant in the room was also wearing the emperor's new media clothes...

"New York Minute" by Ilja Karilampi

In the age of Creative Commons, which initiated a new model of authorship and sharing, it may seem counterintuitive to apply old-school models of ownership to new art forms. Photography, literature, music, movies - let alone online gaming and mobile applications - are all moving toward 21st century methods of monetization, with varying degrees of resistance and success.

So the unknown heroes who emerged from the shadows that night comprised a new generation of collectors. Whether true believers or shrewd speculators, they were the ones who put their money down in the thousands as patrons, preservers and potential catalysts of a new media market. Because at the end of the day, who cares if it's digital bits or stone carvings—the point is, it's Art.

Jamie Ziegelbaum's "Pixel" (sold for $15,000)

Perhaps the most iconic piece of the event was Jamie Ziegelbaum's Pixel, a 100 cm x 100 cm x 8 cm square of glass meant to magnify the luminous color effects of a digital picture element. More significantly, it was the only piece on show that viewers were invited to physically touch and interact with as a playfully conceptual, minimalist installation. Reduced to the basic unit of a touch screen, this giant pixel was a glowing, responsively tactile, human-scaled eyehole to the digital realm.

That evening on Park Avenue, the room was shared by people with paddles, people in heels, people in jeans, one woman wearing Google Glass, and plenty of art-oriented digerati, including Tumblr founder David Karp. The atmosphere was chic, the mood was optimistic, the excitement was clear. And yet, something subversive was in the air.

The first digitally dedicated auction night at Phillips was a lot of fun and raised a lot of money, but was hardly an end in itself. Hopefully, its precedent will succeed in opening up the market by raising awareness of an entire community's ambition to integrate all aspects of the mainstream art world, while focusing on the new media specifics of presenting, collecting and preserving. Just like gay marriage is less about marriage than about equal rights, the Paddles On! auction was less about auctioneering than about equal recognition. Call it backward compatibility, but seen from the moon as a sign of our times, it's one giant step forward for digital art.